Reverse mortgages have always been controversial for elder law advocates, but most agree that for some consumers they are a good option. If you are considering a reverse mortgage, then it is important to know what needs to be considered to determine if it really is a good option for you.
Reverse mortgages have had a bad name among elder law advocates almost from the moment of their introduction. Advocates have pointed out that reverse mortgage terms are often confusing and often make it likely that seniors will be forced out of their homes. However, after the mortgage crisis of 2008 the government took some steps to reform the reverse mortgage industry. These reforms have alleviated some of the problems with the industry. This makes reverse mortgages an option for seniors who are properly informed about the terms of any mortgage they sign. Recently, Consumer Reports articulated some considerations for seniors who are thinking about a reverse mortgage in "Reforms Come to Reverse Mortgages."
These considerations include:
- If you are not planning on staying in your home for very long, then a reverse mortgage is probably not a good idea. The fees associated with the mortgages make them less desirable the shorter amount of time that you will stay in the home.
- If you can meet your financial needs in a different way, then consider doing so. For instance, instead of getting a reverse mortgage it might be a better idea to downsize into a cheaper or smaller home.
- Consider whether your home will still be appropriate as you get older. Houses with lots of stairs may not be the best place for many seniors.
- If a spouse passes away, consider whether the surviving spouse will be able to afford to keep the home and pay the bills on time.
Discussing your options with an elder law attorney will help you make the best decision for your situation.
Reference: Consumer Reports (April 4, 2016) "Reforms Come to Reverse Mortgages"